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Top five reasons you'll pay more for flights
It looks like flight deals are a thing of the past. The airline sector is starting to recover, as evidenced by an aggregate $1.3 billion in earnings for the six largest U.S. carriers last quarter, and more profits are said to be on the horizon. Of course, we're still in the early stages, and those earnings do pale in comparison to the $22.7 billion in losses sustained in 2008 and 2009. So, the airlines are making up for lost time and taking advantage of a swing in the economy ... that means you're going to pay for it.Good news for the airlines, of course, translates to a thinner wallet for you, but it indicates that you're at least willing to handle the higher cost, since airlines tend to be price-takers rather than price setters.
Why are you going to pay more for flights? Here are the top five reasons:
1. Extra fees no longer "extra": they're part of the package now. Airlines raked in $13.5 billion from fees in 2009, a 43 percent spike year over year. They aren't going away. As the industry recovers, this will help keep fares higher.
According to the Associated Press:
United and American led the way on "ancillary revenue," including fees, at about $1.8 billion apiece last year, according to IdeaWorks. United Airlines President John Tague calls fees "an unequivocal success," and suggests his airline could still double the amount it's bringing in with baggage fees.
2. The market supports higher prices: airlines charge what they can get, as it is a consumer-driven market. So far, consumers are responding favorably to price increases, with fares up an average of 18 percent this summer.
3. Airlines to hold the line this fall: demand is expected to decline through the end of summer, and the airline will try to keep from offering deep discounts. In fact, many are offering deals to get passengers interested but are able to convert into higher-priced seats.
4. Shared armrests the norm: the planes are full. Delta filled close to 90 percent of its seats last month, with Continental at 87 percent and American at 86 percent. This means there are more fares covering the cost of the flight, which delivers favorable financial results.
5. Temptation to add flights resisted: rather than bring more planes out to handle this increase in demand, the airlines seem to be fighting the urge, because bookings are sluggish and the economic recovery is tenuous.
[photo by Ma1974 via Flickr]
3. Airlines to hold the line this fall: demand is expected to decline through the end of summer, and the airline will try to keep from offering deep discounts. In fact, many are offering deals to get passengers interested but are able to convert into higher-priced seats.
4. Shared armrests the norm: the planes are full. Delta filled close to 90 percent of its seats last month, with Continental at 87 percent and American at 86 percent. This means there are more fares covering the cost of the flight, which delivers favorable financial results.
5. Temptation to add flights resisted: rather than bring more planes out to handle this increase in demand, the airlines seem to be fighting the urge, because bookings are sluggish and the economic recovery is tenuous.
[photo by Ma1974 via Flickr]
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Filed under: Business, North America, United States, Airlines
Reader Comments (Page 1 of 1)
FINELY TUNED AND POLISHED Jul 30th 2010 8:41AM
NO... It has nothing to do with supply and demand. NO its not that you "HUMANNOIDS" are willing to pay more. NO its not because they claim they are starting to make money.... YES its the power they have within your government to hold you ho$tage with prices !!
BeanerECMO Jul 30th 2010 8:41AM
There are plenty of good deals with the airlines. When I was traveling for business, biz class was $6K+ round trip to London, Paris, or Rome from the east coast. Now, it is ~$3K. And, foreign carriers; e.g., BA, Air France, Lufthansa, SAS, etc. are so much better than UA, AA, Delta etc.
joe Jul 30th 2010 8:51AM
DI YOU EVER NOTICE HOW THE AIRLINES CHEAT YOU? ADDING EXTRAS THEY COULD JUST AS WELL ADD INTO THE PRICE OF THE TICKET. IT WOULD BE CHEAPER TO ADD IT IN THAN TO ADD IT ON!!!!!!!!!!!!!!!!!!!
DID YOU NOTICE HOW THE TOILET PAPER ; THEY SAY IS LONGER? BUTT :) THEY CUT THE WIDTH DOWN TO MAKE YOU THINK THERE IS MORE!!!!!!!!!!!!!!!!!!!!!
DID YOU NOTICE HOW DIAL SOAP DOE NOT LAST AS LONG NOW? THAT'S BECAUSE THEY HAVE MADE IT CONCAVE AND TAKEN AWAY MOST OF THE SOAP BUT THEY MAKE YOU THINK THEIR IS MORE.
THIS COUNTRY IS OVER!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
sueb Jul 30th 2010 7:42PM
I agree, what is wrong with this country? People think they actually have a right to make money or something. I am moving to a country where no one makes money.
If you can't read the Sq. Ft., do math or read the soap's weight, whose fault is that?
There's one born every minute.....
pete Jul 30th 2010 10:37AM
The proper heading for this article should be, "Five more reasons I refuse to fly."